Saturday, November 21, 2009
Top-down Versus Bottom-up
There was a very interesting post on Voxeu.org the other day. The upshot was that bottom-up economics is better than top-down. When I first read the title, I was expecting a discussion of trickle-down vs. trickle-up. But that was not the case. Based on some research from other sciences, the author makes a case for the way we develop and use simple rules (institutions?) to help us make sense of the economic environment, and to help us make decisions. But more intriguing was the author's contention that expectations-based models (thought of as anti-central planning by many) are actually more closely related to top-down models that depend a relative few to make decisions. I think it's worth your time. I'd be interested your responses.